Progress Report on Millennium Development Goals: briefing by Department of Labour

Meeting report

Opening Remarks
The Chairperson welcomed the new Labour Director General, Mr Nkosinathi Nhleko. He also thanked the Acting DG, Mr Sam Morotoba, for his work in that position, noting that they had never felt any tension in the relationship between the Committee and the Department of Labour.

Department of Labour Progress Report on the Millennium Development Goals (MDGs)
Director General, Mr Nkosinathi Nhleko, thanked the Committee for the kind welcome and expressed his hope of strengthening the relationship between the Department and the Portfolio Committee. He explained the first segment of the presentation provided an overview of where South Africa stood as a country. The second segment looked at specific areas that related to the mandate of the Department of Labour.

By way of background, South Africa was expected to report on the progress towards attaining the MDGs. Statistics SA had been charged with coordination for drafting that report. The MDG Country Report had been released and presented by the Minister in the Presidency: National Planning Commission to the legislatures in March 2011. The Department of Labour representative on that commission was assigned to the group dealing with MDG1: Eradication of Extreme Poverty and Hunger. Statistics SA and the Social Development Department had statistics available on MDG1, including:
- Proportion of population below $1 per day, poverty gap ratio,
- Share of poorest quintile in national consumption,
- Growth rate of GDP per person employed,
- Employment to population ratio,
- Proportion of employed people living below $1 per day,
- Proportion of own account and contributing family workers in total employment,
- Prevalence of underweight children under five years of age, and
- Proportion of population below minimum level of dietary energy consumption.

Of the eight MDGs, five were relevant to the Department of Labour: MDG1: Eradicating Extreme Poverty and Hunger; MDG3: Promoting Gender and Equality and Empowering Women; MDG6: Combating HIV/AIDS, Malaria, and other Diseases; MDG7: Ensuring Environmental Sustainability; and MDG8: Developing Global Partnership for Development.

The Department of Labour’s strategic plan, related to accomplishing these MDGs, consisted of nine Key Result Areas (KRA), with an implementation timetable beginning in 2011 and ending in 2016. These KRAs included:
- Contributing to Employment Creation,
- Promoting Equity in the Labour Market,
- Protecting Vulnerable Workers,
- Strengthening Multilateral and Bilateral Relations,
- Strengthening Social Protection,
- Promoting Sound Labour Relations,
- Strengthening the Capacity of Labour Market Institutions,
- Monitoring the Impact of Legislation, and
- Strengthening the Institutional Capacity of the Department.

Each MDG was related to these KRAs. Concerning MDG1: Eradicate Extreme Poverty and Hunger,
the Department of Labour contributed through Employment Creation (KRA1), Protecting Vulnerable Workers (KRA3), Strengthening Social Protection (KRA5), and Promoting Sound Labour Relations (KRA6).

Concerning MDG3: Promote Gender and Equality and Empower Women, the Department of Labor contributed by promoting equity in the labour market.

Likewise with MDG6: Combating HIV/AIDS, Malaria, and Other Diseases, and MDG8: Developing Global Partnerships for Development; the Department of Labour contributed by strengthening multilateral and bilateral relations (KRA4).

Mr Nhleko noted that South Africa had made progress towards achieving its goals. The proportion of the population below $1 per day (PPP = purchasing power parity) dropped from 11.3% to 5% from 2000 to 2006, lower than the 2015 target of 5.7%. Likewise, the poverty gap ratio ($1 per day (PPP)) had dropped from 3.2% in 2000 to 1.1% in 2006, lower than the 2015 target of 1.6%. Finally, the poverty gap ratio ($1.25 per day (PPP)) had dropped from 5.4% in 2000 to 2.3% in 2006, lower then the 2015 target of 2.7%.

Inspection and Enforcement Services (IES)
Mr Sam Morotoba, Deputy Director-General: Public Employment Services, introduced the steps the Department of Labour had taken towards MDG3: Promoting Gender and Equality and Empowering Women. This MDG was related to the Department’s KRA3: Promoting Equity in the Labour Market. Mr Morotoba noted that the IES had done several things towards this target. Many inspections for procedural compliance had been conducted after the promulgation of the Employment Equity Act (EEA). Cases of alleged discrimination had been referred to the Commission for Conciliation, Mediation and Arbitration. Designated employers had also been subjected to a Director General Review process. But the reports showed “very little progress” had been made to achieve equity in the workplace.

Other steps had been taken related to MDG3 as well. Technical Assistance Guidelines had been developed to assist in the implementation of the EEA, and the Department had created Road Shows to create awareness and assist employers in reporting. An online system also existed for employers to submit their reports.         

Mr Morotoba then addressed MDG1: Eradicating Extreme Poverty and Hunger, which was tied to the Department’s KRA4: Protecting Vulnerable Workers. The Department had identified workers in specific sectors as vulnerable workers, including the agriculture and domestic sectors. These workers were the focus of the Department’s interventions. Minimum employment conditions and wages in these sectors had been promulgated for implementation. Labour inspectors were responsible for inspecting and enforcing compliance with these standards, and in the past three years, the Department had conducted blitz inspections in high risk and problematic sectors. Construction was one of those areas targeted for a blitz inspection. The Department had also implemented specific programs to increase awareness of the health and safety standards in these sectors, to make sure of minimising cases of occupational injury and disease.

In relation to MDG7: Ensuring Environmental Stability, the Department had contributed via KRA5: Strengthening Social Protection. Under this area, Occupational Health and Safety regulations had been implemented, and the Department worked together with other government departments to ensure protection of the environment and workers. The Department had participated in committees both regionally and internationally to ensure regulation and environmental stability.

Public Employment Services (PES)
Mr Morotoba began by noting the Department’s contribution to MDG1: Eradicating Extreme Poverty and Hunger, through KRA1: Contributing to Employment Creation. The briefing moved quickly to MDG3: Promoting Gender Equality and Empowering Women. The Department contributed to this goal through KRA2: Promote Equity in the Labour Market. In particular, it had worked on developing the Employment Services Bill, which would be presented to Parliament after the NEDLAC negotiations. One portion of that act was transferred to the Department of Education; the other remained with the Department of Labour. In the process of crafting this legislation, the Department aimed to maintain the current employment services now offered.

Mr Morotoba then returned to MDG1 to highlight the Department’s contribution to employment creation (KRA1). From April 2010 until December 2010, the Department noted that 497 714 jobseekers reported for registration at one of the 125 job centres in the country. 324 720 of those were registered in the different categories. 81% of those jobseekers reporting for registration, 401 479 were referred for career guidance, work placement, Unemployment Insurance Fund, Compensation Fund, and skills development. The bulk of those individuals were referred to the skills development program in the Department of Education for training. In addition, 13 928 unemployed persons were assessed for job opportunities with SpEEX, and 1 294 of them were placed in jobs. Most of those jobs were in the high-end.

Mr Morotoba noted the statistics related to employer services as well. 1 205 companies registered opportunities on the Employment Services for South Africa (ESSA) database. In addition, 950 Private Employment Agencies (PEAs) registered. In total, 725 449 opportunities were registered, and 7 324 opportunities filled. Similarly, 161 applications were received for corporate and general work permits, with 101 receiving approval. Finally, 19 companies were assisted from the Department’s training lay-off scheme, and 6 351 workers benefited from the scheme.

The Department also broke down those numbers based on work seekers in location as of December 2010.

Mr Morotoba returned to MDG3: Promoting Gender and Equality and Empowering women, which the Department had contributed towards via KRA2: Promote Equity in the Labour Market. At the end of December, 19 companies were assisted through the Department of Labour and Department of Higher Education and Training lay-off scheme as part of the economic crisis and as a number of projects related to the World Cup came to an end. 6 351 workers were involved in that program, with a total of R39.9 million allocated, mostly to pay for the salaries of the displaced workers. Workers eligible for training received 50% of their wage, and the employer agreed to pay the other 50% to a social wage (medical, pension, etc). Because of that incentive scheme, many workers opt for training in this process. This program was managed by the Department of Higher Education and Training (DHET).

Mr Morotoba noted that as of December 2010, R681 000 was allocated to People with Disabilities (PwDs) for the 2010/11 fiscal year – something that was seen as a contribution to MDG1: Eradicating Extreme Poverty and Hunger. Of that amount, R403 346 was transferred to National Councils that dealt with the placement of PwDs in employment opportunities. 1 020 persons registered, and 511 were placed through this program.

230 companies were assisted through the Workplace Challenge Programme, while 83 companies were assisted with turn-around solutions and future forums. These forums were focused on helping companies to look at waste and inefficiencies and to correct those problems. Small, Medium and Micro Enterprises had also contributed to sustainable employment creation, with 2 245 SMME managers trained on management and matters related to intellectual property. In total, 8 226 jobs were saved through social plan interventions.

Women had also been assisted in accessing employment services in conjunction with MDG3: Promoting Gender and Equality and Empowering women. A total of 52 853 women registered as job seekers and received assistance. In addition, 64 615 young people were assisted in accessing employment services. Finally, 766 persons with disabilities received this assistance.

Labour Policy and Industrial Relations
Mr Les Kettledas, Deputy Director General: Labour Policy And Labour Market, began by looking at another facet of MDG1: Eradicating Extreme Poverty and Hunger, specifically the target of halving the portion of the population of people whose income was less than $1US per day. The Department was focused on improving conditions for vulnerable workers, and had determined that the real wages of workers in those vulnerable sectors had increased, particularly the wages of domestic and farm workers. Employment in sectors covered by minimum wage legislation grew about 2.9% per annum from 2001 to 2010, and output grew by 4.6%. Overall employment in South Africa of those workers covered by minimum wage legislation grew at a rate of 2.9% per annum from 3.5 million in 2001 to over 4 million in 2007.

Mr Kettledas discussed the poverty status of workers by sectoral determination, looking at the percentage of workers classified as ultra poor, poor, and non-poor. For example, in the domestic sector, 45.3% of households were classified as ultra poor. That number dropped to 36.6% in 2007.

The Labour Department administerd the Labour Relations Act, which allowed the Minister to extend collective agreements concluded by bargaining councils to non-parties. This insured that vulnerable workers normally excluded by the agreements, would benefit from the improved conditions and increased remuneration. This also extended to social security benefits like pension funds and medical aid schemes.

Mr Kettledas also noted that the wage settlement rate in South Africa had been around 8% over the last year, compared to the average inflation rate of 6%, indicating a gradual improvement in living conditions for these workers.

Over the past five years, the average wage settlement rate was slightly higher at 9% for skilled workers, semi-skilled workers, and unskilled workers. This showed that the wage gap was not being maintained. In order to close the wage gap, unskilled and semi skilled workers should have seen a greater increase relative to skilled workers. The lowest wage income of unskilled workers in South Africa was US$9 per day, which indicated that there was improvement in increasing wages and making progress towards eradicating extreme poverty and hunger.

For MDG3: Promoting Gender Equality and Empowering Women, the Department had implemented the Employment Equity Act, which promoted equal opportunities and fair treatment through eliminating unfair discrimination as well as implementing affirmative action measures to address the disadvantages experienced by designated groups, including blacks, women, and the disabled. Mr Kettledas noted that there had been progress in the representation of women in positions with decision-making powers. At the top management level, women occupied 19% of all positions, up 0.8% from 2008. At the senior management level, that number increased from 28.3% in 2008 to 29.3% in 2010. While he acknowledged these were not major improvements, it showed movement in the right direction.

In regards to MDG6: Combating HIV and AIDS, the Code of Good Practice had been implemented to assist both employers and employees. The Technical Assistance Guidelines were published in 2000 and 2001, which keyed in on the elimination of unfair discrimination based on HIV status. The guidelines also dealt with HIV testing, confidentiality and disclosure of HIV status, and how to provide equitable employee benefits.

World Progress on MDGs
Mr Nhleko said the UN had done a consolidation and produced an assessment of international progress. This had also been done to determine how Africa as a continent was moving towards these goals. The UN had concluded that the African countries had experienced mixed results thus far. In particular, the food, fuel, and financial crises had retarded progress in reaching the MDGs, particularly in overcoming poverty, increasing access to education, and bringing women into the main stream of the economy. The UN urged a re-doubling of the effort to achieve these MDGs by 2015. The UN also urged a boost in financial support from the World Bank, including a R8.3 billion zero-interest grant for agriculture, and an additional R750 million for education for countries in Africa and East and South Asia.

Africa had made “significant progress” since 2000, particularly in primary education enrollment, childhood immunizations, stemming HIV/AIDS and TB, and gender empowerment. In contrast, areas like poverty reduction, employment, and most health-related goals had seen “disappointing” progress. Africa as a continent had also seen slow advancement compared to other developing regions, though high population growth relative to other regions masked some of the progress.

South Africa had achieved some of the MDGs more than five years before the target date. The country’s strengths include a sophisticated infrastructure, a well-developed private sector, and a stable macro-economy. Weaknesses included inequality in education, access to quality health care, and the high prevalence of HIV/AIDS. South Africa had not achieved some targets for the MDGs related to employment and income levels and life expectancy.

Discussion
Mr Nchabeleng thanked the delegation and said that to achieve the MDGs, Labour could not do it alone. It could only be done in collaboration with other Departments..

Mr G Boinamo (DA) thanked the presenters, and addressed the small number of jobseekers that were actually placed in a job relative to the number of jobseekers referred for guidance, training, etc. Specifically, he wanted to know what challenges existed in this process.

Mr F Maserumule (ANC) asked if the Department was given a specific area to concentrate on in relation to the MDGs by any international body.

Mr I Ollis (DA) asked about the delegation of duties between Labour and Higher Education for the new Public Employment Services. He said that the proposed bill expanded the Employment Services of South Africa in problematic ways because the ESSA was not delivering on job placements now, and an expanded Department with more staff would not do any better. He noted that of the 497 714 jobseekers, 401 479 were deferred to counseling, training, etc, while the “real number” of people placed in jobs was only 7 324. Mr Ollis had written to the Minister asking for an explanation for these numbers, but he had not received a response after several months. He wanted a breakdown of where the 401 479 were placed, and why only a “tiny, tiny percentage” of the jobseekers were placed in job opportunities. This showed why it was hard for government to work as an employment agency.

Mr E Nyekemba (ANC) thanked the presenters, and started by appreciating the fact that in 2009, the Department indicated there were sectors which needed to have sectoral determinations. Those sectoral determinations had helped protect vulnerable workers, particularly since those workers outside of trade unions might not receive potential benefits from collective agreements. He also expressed confusion about the delegation of duties related to employment services between Labour and Education, particularly in relation to the new Public Employment Services Bill.

Mr Morotoba responded to these questions, noting that there was some confusion about the current and proposed employment services. The Career Guidance and Placement Act (CGPA) had been integrated into the Skills Development Act (SDA). The CGPA of 1981 was repealed in 1998. Then there was a chapter dealing with employment services within the SDA. There would be a transfer of certain functions within the Act to the Department of Higher Education and Training based on the President’s directive. The state law advisors had carved out those sections of employment services that were in the current SDA to make a stand-alone act, and enhance that section and those services.

Concerning the challenges of placements, the biggest was that the majority of the jobseekers had low skills. While there were jobs available, they require a certain level of skill, while most of the jobseekers did not qualify. This mismatch had contributed and characterised the problems concerning low-skill workers. This problem was not unique to South Africa, and could be caused by technology changes in the market place. The content of a job could change, requiring the person training for that job to acquire additional skills. There were few jobs available to accommodate the number of people with low skills. South Africa used to run a skills program that taught people skills like paving, carpeting, painting, etc. Those programs had been discontinued, and as a result, there were a large number of people that still should be assisted.

Many employers would come to the Department to register opportunities, but they were not accepting the people that come to them because they wanted to bypass the system to bring in people from places like Zimbabwe, Malawi, etc. The intention was to get payments, and it had been an issue the Department and Home Affairs had tried to address. The new bill would require employers to provide a reason for declining to accept those jobseekers in an attempt to close those gaps.

Another issue the Department was trying to address related to unemployment. A person who resigned from a position was not eligible for unemployment insurance, because the Department did not want to incentivise job abandonment. The other issue emerging was that there were people that were retrenched and eligible for unemployment insurance. Right now, the Department could not compel an employer to accept an individual for a position.

Mr Morotoba responded next to the questions regarding the number of jobseekers related to job placements. He said that placement was broadly defined. It included individuals in formal jobs, but the bulk of people with low skills were not being registered, though they were being placed in temporary jobs, like jobs with the Expanded Public Works Programme (EPWP). These individuals were not included in the numbers, even though these workers were contributing to the economy. Often people would come needing supplementary training to qualify as an artisan, and those people were getting that training. While the ratio of jobseekers to job placement might look large, by considering these other factors, the Department had reached a “huge achievement.”

The contribution of South Africa to the MDGs was a broader issue than Labour’s contribution. Mr Morotoba noted it was the total combination of all departments that led to MDG progress.

Mr Nhleko addressed a few additional points, noting that foreign companies had to comply with South African law when doing business in the country. He addressed the relationship between the MDGs and the African Peer Review Mechanism, suggesting further work on addressing that relationship.

Mr Ollis had two follow up questions. First, he wanted clarification concerning the proposed requirement that companies provide reasons for denying employment to registered jobseekers. Second, he wanted to know why the Department believed foreign workers were being brought in when there were local people available. Companies building the football stadia, for example, had brought in foreigners for those projects. Mr Ollis wondered what the motivation would be for a company to do so, since it was expensive to conform to visa requirements, etc. He suggested that there were two possibilities: first, that there was a set of specialized skills that would require bringing in a foreigner to do the job; or second, that there was a financial benefit for bringing in foreign labor.

Mr Nyekemba addressed the issue of wage gaps, stating that South Africa could not have gaps between skilled, semi-skilled, and unskilled laborers, and the country was not getting the results it wanted in this area.

Mr Nchabeleng addressed the issue of foreign workers, stating that people went into business not to help people, to help the poor, but to make profit. Profit depended on workers, which he called “a necessary evil.” Because those workers were needed, and there were willing individuals without skills that would accept low-wage jobs, foreigners were being brought in. He called South Africa the “new Jerusalem” for many of these foreign workers. They no longer needed to go to America to seek new opportunity, but could find it in South Africa, which he said was on par with the United States in terms of infrastructure. The ease of immigration across the border made it easier for employers to make a profit with the vulnerable workers who might work simply for food and shelter.

Companies would go out of their way to get the cheapest labor. Even their families might not know where they were, and if they died, “you could just turn them into compost.” In the 1950s, people were used as manure in the potato fields. Industrialists would go for these vulnerable foreign workers. They would even work through injuries in an attempt to do their best, and companies saved money. He noted that there might be other instances where high-skill workers were brought in as well, because South Africa could not do without those jobs necessary to complete certain projects.

He said that there was a lot of anecdotal evidence to answer Ollis’ question regarding the motivation for bringing in foreign workers.

Mr Nhleko noted that finding an answer as to why companies were hiring foreign workers would need more monitoring and study to inform that issue. He said his suspicion was that there were several reasons that would emerge in that study of employment trends.

Mr Nchabeleng suggested working with the Portfolio Committee on Home Affairs in gathering additional information about these concerns brought up in the briefing, particularly in addressing the challenges facing vulnerable workers. He wanted to ensure that the captains of industry treated workers fairly and did not rob them of opportunities afforded by South Africa.

He addressed cross-border trade and foreign companies doing business in South Africa as well as a means of empowering South African workers.

Mr Ollis again asked if companies would be required to provide reasons for declining to employ registered jobseekers.

Mr Morotoba asked that that question be deferred since the new Public Employment Services Draft Bill was still a proposal that had not been presented to Parliament. He illustrated the issue by supposing a certain company had been given an amount to build a road and they needed people to do the work, but the company said “no, we don’t want those people”. The idea was that Home Affairs would not grant the work permit to that company without an explanation for declining those individuals.

He also noted that the Department did meet with other actors including trade unions, businesses, and other government players to address these issues, noting that the last session was in Namibia. These meetings were important for members of the international community, because South Africa recognised the need to work together with that community to assist vulnerable workers. All of these actors recognised the need to address the challenges facing vulnerable workers. In the eyes of the international community, any policies adopted must be in-line with international conventions and best practices in order to stamp out worker abuse.

The meeting was adjourned.